or could it become a problem itself? >> the esm could be a milestone and i personally think that it could indeed be a very important instrument to solve the crisis. they have a lot of firepower and they can be used to prevent crises. there are a lot of discussions to come, for example, greece and what the troicha what they will say. spain could be next. with all of these discussions to come, it's very important that they send a signal saying that they're taking actions that are credible and they stand together. >> there has been a general sense of relief that it is now in place, but what about the reaction from the stock markets? we have more on that. >> how could the euro fund create confidence? it became clear shortly after. shortly after they signed the agreement in luxembourg, the rating agency fitch gave it's first credit rating -- aaa, the best you can get. the esm really is an important component but the question remains how and when the economy will start to get in gear again especially in countries like spain, italy, and f

the ecb has said that it's ready to go, that the esm is ready to go or that the esm is there. it could all fall into place, but of course we need an application from a country and that's of course spain we're talking about to the esn before this whole ball can start rolling. if anything, i thought it was more optimistic or more positive because when we listened to the head of the euro group last night, he said he was very impressed i'm told with the efforts of the agreement government. they said, yes, more efforts need to be made, but i think this is more of the same thing so that they can't say it isn't matter what the troica report says, what you're doing or not doing, you'll get the money. it's more the rhetoric than the fact ultimately whether it's on the corridors here or whether it's in berlin, i think politicians even of the opposition go with the assumption that degrees is going to get the next tranche and probably a troica report that's not so disfavorable. >> and have to ask you about the comments of the finance minister saying spanish don't need an assistance progra

or less a given. and then of course the next interesting step, bond buying. by the esm, by the ecb. so it's more the what comes after what happens today than the actual session today that is markets and for the further development. and of course the question remains to be seen, we have the omt promise, yields are do doing okay right now. but that's usually when it starts costing. >> he has the catalonian referendum coming up. meanwhile jerry brown has ordered the state's plugs regulators to let gas stations help sell winter blend fuel to help the spike. it high school $4.66 a gallon on sunday, topping $5 a gallon in some areas. winter blend is cheaper to make. despite the weakness in the global economy, the cost of oil and still rising gasoline prices as evidenced there. what impact is that having? >> unfortunately when gasoline prices rise in the u.s., it end its to eat into real disposable income. so less to spend elsewhere. if you look at just the last few months we've had in the third quarter, you saw reasonable growth in july because glen prices didn't change that much. august

that and except the reforms that are going to be necessary, whether it's attached to the imf or attached to the esm they're going to have to do that. i don't think they'll have any alternative. >> roger we have to go in a moment but i want to go back to an initial conversation about taxes and democrats in particular and we talked about broadening the base. sorry to switch topics on you but i always wonder why the democrats have always used this 250 number and why when we talk about broadening the base why they don't go down to a lower number. if the median income in this country is $50,000 and assuming the democrats want to protect people at the bottom or even the "middle class," why isn't the number 90,000, 100,000 or 120,000? >> first of all i wish i felt differently but the idea we're going to have tax reform over the next three, four, five months of the type you're talking about in order to resolve the fiscal cliff is i think fallacious. it takes longer. are begoing to see tax reform over the next year? i think the answer is no, i mean big, sweeping tax reform, lower rates and broaden the base,

she gets there but they're still working out whether or not they'll meet conditional ate and a eurozone finance minister's meeting will launch the esmeads, 13% of the stock come out and say we do not approve of the merger, we don't understand strategic logic and it will jeopardize bae's position in the u.s. defense market as well and impair the commercial prospects for the business. they've said this combination between these two stocks should not happen, not at least if you also have a dual listing t will also impair the liquidity for the stocks as well. that's a big private hairholder coming out, let alone the government shareholders can't agree on it either. and george osbourne, the uk chancellor is speaking at the conservative party conference expecting him to confirm another $10 billion in welfare savings. the key someone spain, 5.65% so yields are slightly lower once again as those yields stay at those levels the spanish government will say it's a fairly manageable situation at the moment so they will keep probably delaying having to ask for a bailout trying to get beyond a referendum in catalouna, a big region in spain. back

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or just the pressure it puts on those companies to perhaps look elsewhere. >> speaking to cnbc earlier, blamed the move on the pressure on spain, but more important was the backtracking on using esm to directly capitalize the banks. >> the perceived commitment of eurozone governments to mutualize the cost of spanish bank programs have been put into question very much so and should be rejected fairly clearly by core european finance ministers. and we think this is a destabilizing factor in the country's credit outlook. so the question is what pressure that might put on its italian auction today. they're selling up to 6 billion in july btb. we did see t-bills yields edging higher for italy. has already raised, though, 80% of the 465 billion needed to fund the 12012 outstanding debt. but those auction results will be out in just over an hour's or so time. >> even for the impact on spanish bonds, when people look and wonder perhaps why there isn't more impact, it's not just because this move is largely priced in. it's also because the ownership has been transitioning to domestic. so certainly at any time a healthy development itself. >> we also have data coming out, as well, spanish